For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?
Every weekend we publish simple performance tables for a variety of different asset classes and categories along with brief commentary on each.
As this is something we do internally on a daily basis, we believe sharing it with clients will add value and help them better understand our top-down approach. We use these tables to provide insight into both relative strength and market internals.
This week we want to highlight our US Equity Index and Factor tables, as they are both showing near-term reversions in some of the most robust long-term intermarket trends.
Yesterday we published a post titled "The Reality Regarding Real Estate" in which we pointed out the long-term underperformance of REITs as a sector. And although we see no signs of this trend reversing any time soon, when we dug into the space we couldn't help but notice a select group of stocks outperforming not just Real Estate, but the broader market as well.
In this post, we will illustrate the relentless strength from this niche group of Data-Center and Cell-Tower REITs and offer two trade ideas in the space.
We also wrote a post lately in which we filtered the S&P 500 down to just 32 of its strongest performers based on a variety of metrics. Despite the weakness from Real Estate as a whole, five of the stocks on that list are actually components in our All Star Charts Custom Data-Center & Cell-Tower REIT Index.
These are the registration details for the monthly conference call for Premium Members of All Star Charts.
This month’s Conference Call will be held on Monday April 13th at 7PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with all of the other calls since 2015.
Thanks to everyone for participating in this week’s Mystery Chart. The vast majority of respondents were either sellers or wanted nothing to do with this messy mess of a chart. Some of our less risk-averse participants were willing to bet on a failed breakdown and buy a reversal back above the recent lows.
In our opinion, this is the definition of a structural downtrend and there is very little evidence to suggest that will change anytime soon. With that as our backdrop let's discuss why this chart is on our radar right now.
This is a weekly line chart of Real Estate (IYR) vs the S&P 500 (SPY) looking back about 20-years.
In our Table Of The Week, we highlighted some of the strongest stocks in the S&P 500 right now. We showed statistical evidence that these stocks have not only performed better over the long-run, but they've also suffered smaller drawdowns in the near-term.
Despite remaining skeptical of what is still a bear market rally in our opinion, there are always opportunities on the long side, we just need to pick our spots carefully and respect our risk management levels. In this post, we're going to outline trade setups in what we believe are some of the most robust uptrends still in place.
If the market moves higher from here, these stocks should continue to exhibit leadership. If it rolls over, they should hold up better than the average stock and our risk will be well-defined to ensure minimal losses in the case we're wrong.
If you read our research regularly you may be sick of this by now, so my apologies. But there is a method to our madness. A tried and true repeatable process that allows us to consistently identify the strongest and weakest areas of the market. Any market. While we've focused mainly on US Equities recently, we can apply these same principles to any asset class.
We have continually highlighted the fact that the long-term outperformers are often also the short-term leaders. Why? Because there is empirical evidence to support this and we know it works. I'll be writing an educational post about this soon.
We've also written a lot lately about how one of the main signals we're looking for before turning bullish on stocks is for the percent of NYSE components to break back above 15%. Well, we're still not really close, but with such drastic daily swings in the major indexes, this could change fast so we want to be ready if and when it does.
Earlier this week, I put out a note about what I've been telling friends and family when they come asking. It comes with the territory right? I'm sure many of you are being sought after in similar ways. It makes sense for this environment.
But the truth is, I underestimated just how much this post would resonate with people. So much so, that I figured I'd write a follow up about another popular, yet simple strategy that I learned a long time ago.
To recap, what the Family & Friends post was about, was the percentage of stocks on the NYSE above their 200 day moving average. Historically, it's when we're above 15% and rising that it makes the most sense to own stocks. When we're below that, it's further evidence that stocks are a mess.
A couple of weekends ago, I had the privilege of hosting Chart Summit 2020, an online virtual Technical Analysis conference. We had over 30 presentations, 10,000 attendees and raised a ton of money to help the people who need it most right now. A great part about the whole thing is, not only all the fun we had, but how much we all learned!
